Incumbents, Unions Ally against EC Telecom Proposals
European telecom incumbents this week teamed with unions to warn the European Commission about risks they see in planned regulatory changes. In a joint statement, the European Telecommunications Network Operators’ Association and UNI-Europa said coming recommendations for revising the e-communications regulatory framework seem focused on short- term services competition, at the expense of jobs and long- term infrastructure investment. But competitive providers call increased competition good for economic growth.
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ETNO and UNI-Europa urged the EC to design regulatory changes to spur investment in the sector and create jobs and growth, in line with the so-called Lisbon strategy of making Europe the world’s most knowledge-based economy by 2010. Regulatory decisions “have both employment and wider social impacts,” and the EC should analyze their effect on workers, they said.
The EC aims to remove preemptive competition rules from retail markets. The incumbents and the union said favoring short-term rivalry between service providers will discourage large-scale private investment in next-generation broadband networks and services. Merely strengthening current access regulations could slow major financing and rollout of facilities-based competition, they said.
The critics dismissed EC claims that regulations favor investment, saying they have data proving otherwise. A LECG report in September for ETNO found that “intense access regulation” such as unbundling hurts competition by slowing investment in new and alternative networks (CD Sept 17 p7). European Competitive Telecommunications Associations data show that giving competitors access to legacy networks fuels broadband competition, the group said (CD Sept 5 p8). That body has sparred with ETNO for years over the best way to increase competition in Europe’s telecommunications sector.
The odd pro-monopoly alliance is troubling, ECTA Regulatory Affairs Head Ilsa Godlovitch told us. Employees have “nothing to fear,” she said. According to ECTA, more telecom competition should mean more telecom employment, she said. Other studies show that liberalized markets create value-added services, which should increase knowledge-based jobs in telecom and beyond, she said.
As incumbents acquire operations outside their home countries and become new entrants, the line between them and alternative providers is blurring, EurActiv.com reported Thursday. ETNO has had trouble getting members to oppose functional separation, it said. That remedy, favored by the EC and ECTA, would let national regulators order dominant companies to divide their networks from their services arms in intractable competition cases.
British Telecom, which several years ago agreed to functional separation to avoid a Competition Commission probe, and Telecom Italia, under pressure from its national regulator, opted out of several ETNO common positions, said EurActiv. That kept ETNO and UNI-Europa from taking up functional separation and other controversial issues being debated ahead of the EC recommendations.
The idea that ETNO members are divided is “pure speculation,” a spokesman told us. The joint statement clearly shows that broad concern persists about the review proposals and ETNO’s position on the review, especially on functional separation, he said. Mandatory separation isn’t an appropriate tool in today’s competitive markets, he said. At a Friday meeting in Copenhagen, ETNO’s General Assembly will issue a statement reiterating the views of its members on the EC proposals, the spokesman said.
Companies’ views arise from their business models, said Godlovitch. The more legacy providers realize that there are lives and markets outside their own countries, the more likely they are to share ECTA’s view, she said.